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When news broke that the Trump Administration was reviewing the clean car standards protecting consumers and the environment, numerous states, unions, consumer, health, and environmental groups sounded the alarm. The current standard, which regulates greenhouse gases and fuel economy, was one of the biggest environmental victories of this decade. By 2025, these standards were designed to reduce carbon emissions from new passenger vehicles in the United States by 50% and double fuel economy.

In fact, they are one of the most substantial global efforts to reduce carbon pollution. And fuel economy improvement continues to have strong public support in the US, with some 87% of Americans agreeing that automakers should continue to improve fuel economy.

Many stakeholders, from states, to environmental and consumer groups, to even auto suppliers, warned the administration against overreach. But no one really knew how severe the proposed weakening of the standards would look like, the flawed research they would use to justify their decisions, or who would win and lose from them.

Now we do - and it’s not pretty.

U.S. President Donald Trump, center, speaks during a meeting with bipartisan members of Congress on trade in the Cabinet Room of the White House in Washington, D.C., U.S., on Tuesday, Feb. 13, 2018. Republican lawmakers cautioned Trump in a White House meeting against levying tariffs on steel and aluminum imports, warning that it would raise prices of the metals and potentially cost the U.S. jobs in other industries including car manufacturing. Photographer: Yuri Gripas/BloombergPhotographer: Yuri Gripas/Bloomberg

Dubious Analysis Behind A Dangerous Proposal

Among the proposed changes are freezing 2020 standards through 2026. Currently, standards step up fuel economy requirements each year so the auto companies don’t have to clear massive hurdles at one time. The approach has been very successful. Since the standards went into effect in 2012, automakers have met the standards – even performing better, while profits have reached 10-year highs. Freezing the standards five years before the program reaches its final level is an unnecessary and dramatic weakening of the existing standards.

The proposal also seeks to prevent California from adopting its own, stronger greenhouse standards for cars. California, a global leader in cleaning up auto emissions since the 1960s, was given the right to set its own standards in 1972, the year the U.S. EPA was founded. Since then, 12 other states and Washington D.C. have elected to follow the California standards.

This right has been reaffirmed many times during the last 45 years and over the course of eight administrations, five of which were Republican. On May 1st, 17 states and Washington D.C. filed a lawsuit against the Trump Administration over its auto policy, testament to the federal move's perception as a wide overreach on state’s rights.

For example, the EPA’s most recent, detailed 2017 analyses put the final per vehicle cost of compliance at $875. The Trump proposal puts it at $1,900 a vehicle, more than twice as much, without clear justification. The proposal also concludes that the 2025 greenhouse gas standards will cause fatalities, a theory directly contradicted by a recent study that found higher fuel economy standards will actually save lives.

Another assumption, that the U.S. no longer needs to conserve energy because it is now a major oil producer, is not true if we want to protect consumers from oil price shocks. Furthermore, it doesn’t hold up if, say, you are interested in reducing the number of Americans who have asthma, emphysema, or die prematurely because of air pollution.

Assuming that this proposal moves forward to become policy, who are the winners and losers? Since there are more losers than winners, let’s start with them.

In the U.S., the biggest losses will hit consumers. The existing 2025 standards are expected to save drivers up to $5,000 in reduced fuel cost over the life of their vehicles, adding up to $1.7 trillion for the overall economy. By locking in fuel economy at the 2020 level, the Trump proposal will hurt consumers’ pocket books. Fuel prices have been low for several years now, but have always been cyclical. They are currently at the highest levels in five years and are continuing to rise, increasing the pain of all the above groups.

Other losers include the myriad American companies that produce cleaner automotive technology. Without strong standards in place, they will see their markets diminish. More broadly, Americans’ health will suffer from poor air quality. And, though the global effort to combat climate change will continue apace, it will be dealt a serious blow as the planet has to contend with billions of tons of additional carbon dioxide.

A layer of pollution can be seen hovering over Los Angeles, California on October 17, 2017, where even though air quality has improved in recent decades, smog levels remain among the nations's worst, with wildfires in the region also contributing to poor air quality. / AFP PHOTO / FREDERIC J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)

Surprisingly, the proposal would be a mixed bag for vehicle manufacturers. On one hand, they stand to gain short-term benefit in selling less-efficient SUVs. The trade-off is that the industry’s future will be clouded with uncertainty and protracted litigation. California, Washington D.C., and the 16 other states representing some 43% of U.S. car sales that are taking legal action against any rollback of the existing standards appear firmly committed to fighting the administration in the courts. Given existing case law, these states stand a reasonable chance to succeed in upholding the Section 177 waiver that allows states to set stringent fuel efficiency requirements.

This proposal will also encourage U.S. automakers to fall back into the bad habits that nearly destroyed the industry in 2009 and cost taxpayers some $9.3 billion in bailouts. If companies focus too much on selling inefficient SUVs domestically, they run the risk of underinvesting in new automotive technology. They will become less globally competitive, falling behind the growing international demand for hybrids, electrics and more efficient conventional vehicles. Indeed, many countries, including India, France, Netherlands, Norway, Scotland, the United Kingdom, China and Germany are all working towards banning gas-powered vehicles in the coming decades.

This is pretty simple math: If cars and trucks burn more gas and diesel, oil company sales will go up. Still, the amounts are staggering. The proposal means an increase in gasoline consumption between 2020-2050 of some 206 billion gallons, or a windfall of some $600 billion, at current gas prices. That’s an excellent return on the $5.7 million spent by the Koch brothers and oil industry to get Scott Pruitt appointed EPA administrator.

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